New South Wales regulation

Insurance Premiums Order 2011–2012

In ForceNSW

Jurisdiction

New South Wales

Act Number

283 of 2011

Collection

regulation

Plain English Summary

8/10 complexity

This Order fixes how workers’ compensation insurance premiums for 2011–12 are calculated: it prescribes mathematical formulas, caps and adjustments (experience, GST/input‑tax, mine‑safety, dust diseases), a minimum premium and a 3% discount for full up‑front payment. Employers pay the premiums; insurers apply the formulas using wage and claims data and the Authority retains limited discretion to issue guidelines or reduce factors (cl.3; Schedule 4 cl.5). It matters because it determines employer cost, reporting obligations and record‑keeping requirements.

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What it does

This Order sets the detailed mechanics for calculating workers compensation insurance premiums for policies taking effect between 4 pm on 30 June 2011 and 4 pm on 30 June 2012 (see Schedule 2, cl 1). It prescribes the algebraic formulae and component items that determine the premium an employer must pay (cl 3(1)). The Order distinguishes different employer sizes (small, medium, large) and provides different formulae and caps depending on that classification (Schedule 1, cl 2; cl 3(1)(a)-(b)). It incorporates multiple adjustments and loadings into the premium: the basic tariff premium (T) calculated by reference to Table A and Table B (Schedules 3 and 11/12), an experience adjustment factor (S) (Schedule 4), an experience premium (E) (Schedule 5), a premiums adjustment contribution (Q), a dust diseases contribution (D), an input tax credit adjustment (I) (Schedule 8), a Mine Safety Fund premium adjustment (M) (Schedule 9), and an apprentice incentive amount (A) (Schedule 10) (cl 3(1) and Schedule 1 definitions).

The Order imposes upper limits on the experience-adjusted premium relative to the basic tariff premium for employers and groups (cl 3(2)-(3)). It provides a 3 per cent discount for employers who pay the initial premium in full, subject to conditions including a 12‑month period of insurance and notification of a reasonable wages estimate to the insurer (cl 4). It prescribes a minimum premium of $175 (Schedule 6, cl 1) and sets the prescribed late payment interest rate used under specified sections of the Act at 1.018% per month compounded monthly (cl 6). It specifies the amount treated as certain claim costs and provisional payments for purposes of the Regulation as $1,774.50 (cl 7). The Order also sets the prescribed excess amount rules that interact with s 160 of the Workers Compensation Act 1987, including a nil excess where the employer notified the insurer of the injury within 5 days, otherwise the lesser of the worker’s current weekly wage under s 42 or $1,774.50 (cl 5).

Current sections

Direct links to the current provisions in Insurance Premiums Order 2011–2012.

Name of Order

1 Name of Order

This Order is the Insurance Premiums Order 2011–2012.

Commencement

2 Commencement

This Order commences at 4 pm on 30 June 2011 and must be published in the Gazette.

Calculation of insurance premium payable by employer

3 Calculation of insurance premium payable by employer

(1) The premium payable by an employer for a policy of insurance is to be calculated by requiring the premium to be calculated for a period of insurance of not more than 12 months and:

(a) if the employer is a medium or large employer for the purposes of the policy, in accordance with the following formula:

(b) if the employer is a small employer for the purposes of the policy, in accordance with the following formula:

where:

P is the premium for the time being payable by the employer in respect of the period of insurance to which the policy relates, being:

(a) except as provided by paragraph (b), the initial premium so payable in accordance with this Order, or

(b) where adjustments are required to be made to that premium by reason of the operation of this Order, the premium so payable by reason of those adjustments.

T is the basic tariff premium for the employer, calculated with respect to the period of insurance in accordance with Schedule 3.

S is the experience adjustment factor for the employer determined with respect to the period of insurance in accordance with Schedule 4.

E is the experience premium, if any, for the employer determined with respect to the period of insurance in accordance with Schedule 5.

Q is the premiums adjustment contribution, if any, for the employer.

D is the dust diseases contribution, if any, for the employer.

I is the input tax credit adjustment, if any, for the employer determined with respect to the period of insurance in accordance with Schedule 8.

M is the Mine Safety Fund premium adjustment, if any, for the employer calculated with respect to the period of insurance in accordance with Schedule 9.

A is the apprentice incentive amount, if any, for the employer determined with respect to the period of insurance in accordance with Schedule 10.

(2) However, where the basic tariff premium less the apprentice incentive amount [T − A] for a policy of insurance whose total premium is to be calculated under subclause (1) (a):

(a) is less than $50,000 (or, if the period of insurance is to be less than 12 months, where the basic tariff premium less the apprentice incentive amount [T − A] would be less than $50,000 were that period of insurance to be 12 months), the experience adjusted premium is not to exceed one and a half times the amount of that basic tariff premium , and

(b) is or exceeds $50,000 but is less than $150,000 (or, if the period of insurance is to be less than 12 months, where the basic tariff premium less the apprentice incentive amount [T − A] would be or would exceed $50,000 but would be less than $150,000 were that period of insurance to be 12 months), the experience adjusted premium is not to exceed twice the amount of that basic tariff premium , and

(c) is or exceeds $150,000 but is less than $300,000 (or, if the period of insurance is to be less than 12 months, where the basic tariff premium less the apprentice incentive amount [T − A] would be or would exceed $150,000 but would be less than $300,000 were that period of insurance to be 12 months), the experience adjusted premium is not to exceed two and a half times the amount of that basic tariff premium .

(3) However, if the employer is a member of a group:

(a) subclause (2) does not apply, and

(b) where the sum of the basic tariff premiums less the sum of apprentice incentive amounts [TG− AG] for all the members of that group:

(i) is less than $50,000 (or, if the period of insurance is to be less than 12 months, where the sum of basic tariff premiums less the sum of apprentice incentive amounts [TG− AG] would be less than $50,000 were that period of insurance to be 12 months), the experience adjusted premium for the employer’s policy is not to exceed one and a half times the amount of the employer’s basic tariff premium , and

(ii) is or exceeds $50,000 but is less than $150,000 (or, if the period of insurance is to be less than 12 months, where the sum of basic tariff premiums less the sum of apprentice incentive amounts [TG− AG] would be or would exceed $50,000 but would be less than $150,000 were that period of insurance to be 12 months), the experience adjusted premium for the employer’s policy is not to exceed twice the amount of the employer’s basic tariff premium , and

(iii) is or exceeds $150,000 but is less than $300,000 (or, if the period of insurance is to be less than 12 months, where the sum of basic tariff premiums less the sum of apprentice incentive amounts [TG− AG] would be or would exceed $150,000 but would be less than $300,000 were that period of insurance to be 12 months), the experience adjusted premium for the employer’s policy is not to exceed two and a half times the amount of the employer’s basic tariff premium ,

where:

AG is the sum of apprentice incentive amounts (if any) for all the members of the group calculated:

(a) where the period of insurance to which the premium relates is 12 months—in accordance with Schedule 10 with respect to that period of insurance, or

(b) where the period of insurance to which the premium relates is not 12 months—in accordance with Schedule 10 as if the policies to which the premiums relate had a period of insurance of 12 months.

TG is the sum of the basic tariff premiums for all the members of the group calculated:

(a) where the period of insurance to which the premium relates is 12 months—in accordance with Schedule 3 with respect to that period of insurance, or

(b) where the period of insurance to which the premium relates is not 12 months—in accordance with Schedule 3 as if the policies to which the premiums relate had a period of insurance of 12 months.

Discount available for premiums paid in full

4 Discount available for premiums paid in full

An employer is entitled to a discount of 3 percent on the initial premium payable by the employer for a policy of insurance if:

(a) the period of insurance to which the policy relates is 12 months, and

(b) the employer has paid the discounted amount of the premium in full by the date on which payment of the premium is due, and

(c) the employer has not elected to pay the premium by instalments, and

(d) the employer has notified the insurer, in accordance with the regulations, of the reasonable estimate of the wages that will be payable during the period of insurance.

Note—

Clause 147 of the Workers Compensation Regulation 2010 requires an employer to notify the insurer concerned of the matter referred to in paragraph (d).

Recovery of excess from employer: section 160 of Act

5 Recovery of excess from employer: section 160 of Act

For the purposes of the definition of prescribed excess amount in section 160 (1) of the Act, the following excess amount is specified:

(a) if the employer concerned notified the relevant insurance scheme agent of the injury that led to the weekly compensation claim of the worker within 5 days of the employer becoming aware of it—$0,

(b) in all other cases—the lesser of the following:

(i) the amount that is the current weekly wage rate of the worker as determined by section 42 of the Act,

(ii) $1,774.50.

Note—

Under section 160 (2) of the Act, an employer is required to repay the prescribed excess amount to the insurer under a policy of insurance in respect of each weekly compensation claim that the insurer has paid under the policy. However, if the amount that the insurer has paid in respect of any such claim is less than the prescribed excess amount, the amount the employer must repay is that lesser paid amount.

Late payment prescribed rates: sections 170 (8) and 172 (5) of Act

6 Late payment prescribed rates: sections 170 (8) and 172 (5) of Act

For the purposes of sections 170 (8) and 172 (5) of the Act, the prescribed rate is 1.018% per month compounded monthly.

Calculation of costs of individual claims and provisional payments of compensation: clauses 154 (2) (d) (ii) (C) and 155 (2) (d) (ii) (C) of Regulation

7 Calculation of costs of individual claims and provisional payments of compensation: clauses 154 (2) (d) (ii) (C) and 155 (2) (d) (ii) (C) of Regulation

For the purposes of clauses 154 (2) (d) (ii) (C) and 155 (2) (d) (ii) (C) of the Workers Compensation Regulation 2010, the amount specified is $1,774.50.

Schedules form part of Order

8 Schedules form part of Order

Schedules 1–12 form part of this Order.

Schedule 1

Interpretation

Schedule 1 Interpretation

(Clause 8)

Determination of wages

9 Determination of wages

(1) In this Order, a reference to wages, in relation to a period of insurance under a policy issued or to be issued to an employer or in relation to a period of 12 months ascertained by reference to any such period of insurance, is a reference:

(a) except as provided by paragraph (b), to a reasonable estimate of the monetary value of all wages (not including any wages to which Schedule 7 applies) payable to workers by the employer in respect of the period of insurance or the period of 12 months, as the case may be as calculated by reference to the returns, if any, furnished in accordance with the regulations by the employer to the insurer, or

(b) where the monetary value of those wages (not including any wages to which Schedule 7 applies) has been ascertained—to the actual value of those wages.

(2) If at any time the employer has failed to furnish the returns in respect of any relevant period of insurance and the monetary value of the wages concerned has not been ascertained, the estimate of the monetary value of those wages is taken to be such amount as is calculated by multiplying the monetary value (or reasonable estimate) of wages for the immediately preceding equivalent period of insurance by 1.3.

(3) For the avoidance of doubt:

(a) in this Order, a reference to wages payable to workers includes wages payable to apprentices, and

(b) in subclause (2), the monetary value (or reasonable estimate) of wages for an employer for the immediately preceding equivalent period of insurance includes the monetary value (or reasonable estimate) of wages for the immediately preceding equivalent period of insurance paid to apprentices.

Meaning of predecessor

10 Meaning of predecessor

(1) For the purposes of this Order, a person is the predecessor of an employer if:

(a) Acquisition or otherwise gaining possession of predecessor’s business

the employer has acquired or otherwise come into the possession of the business of the person, or

(b) Transfer of all or majority of predecessor’s workforce

the employer has, during any policy period, employed workers who at any time constituted all or a majority of the workers employed, during any policy period, by the person and those workers have carried out activities or performed services for the employer that were the same or similar to activities carried out or services performed by those workers for the person.

Note—

The claims and wages history of an employer’s predecessor are used in the calculation of the employer’s workers compensation insurance premium—see Schedule 4, clause 4 and Schedule 5, clause 1 (3) of this Order.

(2) Subclause (1) (a) applies whether the business acquired is the whole or main part of the business of the person or is the whole or main part of a separate and distinct business of the person, and whether or not the business acquired is carried on at the same location.

(3) Subclause (1) (b) applies whether or not the activities carried out or services performed for the employer were carried out or performed at the same location as those carried out or performed for the person.

(4) In this clause, business has the same meaning as in Division 2B of Part 7 of the Act.

Schedule 2

Application

Schedule 2 Application

(Clause 8)

Schedule 3

Basic tariff premium

Schedule 3 Basic tariff premium

(Clause 3)

Schedule 4

Experience adjustment factor

Schedule 4 Experience adjustment factor

(Clause 3)

Schedule 5

Experience premium

Schedule 5 Experience premium

(Clause 3)

Schedule 6

Minimum premium

Schedule 6 Minimum premium

(Clause 8)

Schedule 7

Reduction of premium for employers of previously injured workers etc

Schedule 7 Reduction of premium for employers of previously injured workers etc

(Clause 8)

Schedule 8

Input tax credit adjustment

Schedule 8 Input tax credit adjustment

(Clause 3)

Schedule 9

Mine Safety Fund premium adjustment

Schedule 9 Mine Safety Fund premium adjustment

(Clause 3)

Schedule 10

Apprentice incentive scheme

Schedule 10 Apprentice incentive scheme

(Clause 3)